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CA Final International Working Capital Management — practice questions

Explore 44 free International Working Capital Management questions in CA Final Strategicfinancialmanagement. Open each question or exercise to read its content, reference answers and available explanation.

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International Working Capital Management questions and exercises with answers

Showing questions 1–30 of 44.

Which payment tool gives an exporter a guarantee from a creditworthy bank?Read the answer and worked solution →In which year was the first UCP for documentary credits prepared?Read the answer and worked solution →Which 2007 revision of ICC rules governs common letter of credit practice?Read the answer and worked solution →In a letter of credit, who is normally the applicant?Read the answer and worked solution →Who is normally the beneficiary of a letter of credit?Read the answer and worked solution →What does the advising bank do in a letter of credit transaction?Read the answer and worked solution →What does a confirming bank add to a letter of credit?Read the answer and worked solution →Documents that do not meet the terms of a letter of credit are called what?Read the answer and worked solution →Under UCP 600, how are all letters of credit treated?Read the answer and worked solution →An LC is called confirmed when what happens?Read the answer and worked solution →What does a red clause letter of credit allow the seller to do?Read the answer and worked solution →A standby letter of credit is mainly meant to serve as what?Read the answer and worked solution →When is a letter of credit made transferable?Read the answer and worked solution →Which risk does the issuing bank face because of the applicant's finances?Read the answer and worked solution →What is trade finance mainly meant to do?Read the answer and worked solution →In a documentary collection, what is the role of the banks?Read the answer and worked solution →What does Documents against Acceptance require of the buyer?Read the answer and worked solution →What does a bill of exchange do in international trade?Read the answer and worked solution →A buyer places an order worth USD 200,000 and pays 30% in advance. How much is paid at ordering?Read the answer and worked solution →What is forfaiting also called, given the exporter gives up recourse?Read the answer and worked solution →Forfaiting usually supports the sale of which type of goods?Read the answer and worked solution →What credit period does a typical forfaiting transaction extend to the importer?Read the answer and worked solution →In forfaiting pricing, what are days of grace for?Read the answer and worked solution →Which instrument can evidence receivables in a forfaiting deal?Read the answer and worked solution →What does a business do when it factors its receivables?Read the answer and worked solution →How many parties are directly involved in a factoring transaction?Read the answer and worked solution →A factor advances 80% against an invoice of Rs 10,00,000. What is paid upfront?Read the answer and worked solution →Why does spot factoring usually cost more than whole ledger factoring?Read the answer and worked solution →In US accounting, how does invoice discounting differ from factoring?Read the answer and worked solution →How is working capital calculated?Read the answer and worked solution →

Worked practice questions

Which payment tool gives an exporter a guarantee from a creditworthy bank?

  1. Bank overdraft facility
  2. Open account credit
  3. Letter of credit
  4. Cash on delivery
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Correct answer: C. Letter of credit

A letter of credit substitutes the bank's promise to pay for the buyer's own credit, which protects an exporter who cannot judge a foreign buyer.

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In which year was the first UCP for documentary credits prepared?

  1. 1913
  2. 1933
  3. 1953
  4. 1973
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Correct answer: B. 1933

The first UCP framework dates to 1933; 1973 is when SWIFT was created, which is a separate event.

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Which 2007 revision of ICC rules governs common letter of credit practice?

  1. UCP 300
  2. UCP 400
  3. UCP 500
  4. UCP 600
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Correct answer: D. UCP 600

UCP 600, revised in 2007, is the current set of rules most letters of credit follow.

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